Wipro fails to cheer

OUR SPECIAL CORRESPONDENT

Mumbai, Jan. 18: After stellar third-quarter performances from the technology titans, a wave of disappointment swept the Street after Wipro forecast a muted guidance for the year that took some shine off its 18 per cent growth in net profits at Rs 1,716.4 crore.

Analysts had expected the Bangalore-based company to report net profits in the region of Rs 1,600 crore.

Wipro earned a net profit of Rs 1,611 crore in the same period last year.

The company said revenues from its IT services business would be in the range of $1,585 million to $1,625 million for the quarter ending March 31, translating into a sequential gain of just 0.5 per cent. The markets had expected Wipro to announce a growth of at least 1 per cent at the lower end.

Investors have started taking a fresh look at the IT sector after the strong third-quarter numbers reported by Infosys, Tata Consultancy Services and HCL Technologies.

Infosys had raised expectations after raising its revenue forecast for the full year.

The Wipro stock was hammered on the stock exchanges and closed with a loss of nearly 8 per cent at Rs 397.15 on the Bombay Stock Exchange.

The other big disappointment was on the volume front (billable hours). While this is one number that analysts track very closely, volumes at Wipro shrank 1 per cent over the preceding quarter compared with its top peers who reported an increase.

Wipro reported IT services revenue of Rs 8,602 crore, which was 13 per cent higher than last year. In dollar terms, IT services revenue stood at $1,577 million, a sequential increase of 2.4 per cent. It had earlier forecast revenues at anywhere between $1,560 and $1,590 million.

On the positive side, the company reported an expansion in operating margins by 40 basis points to 17.7 per cent quarter-on-quarter.